Pakistan stocks gain 7.5% in May despite India tensions

Pakistan’s stock market closed May with a strong 7.5% gain, despite sharp turbulence caused by geopolitical tensions with India earlier in the month.

The KSE-100 Index dipped below 104,000 points at the height of Pakistan-India tensions but rebounded sharply after a ceasefire was announced. The market eventually closed the month at around 120,000 points.

A major driver of the recovery was the timely release of $1 billion from the International Monetary Fund (IMF) under its second tranche, alongside a 100 basis points cut in Pakistan’s policy rate to 11.0%.

Reported progress in trade talks with the United States also helped maintain bullish investor sentiment.

In early May, the KSE-100 suffered its steepest-ever single-day points loss, dropping 6,482 points on May 8 to close at 103,527. But as tensions eased, the market posted a record single-day gain of 10,123 points, or 9.45%, closing at 117,298.

For the month, average daily trading volumes reached 566 million shares, up 9.2% from April. However, the overall traded value fell by 11.3% to $99.8 million.

Foreign investors remained net sellers, offloading $13 million worth of shares. Major sales were seen in the textile sector ($8.5 million), exploration and production ($6.1 million), power ($3.2 million), food producers ($2.7 million), and fertilizer ($1.8 million).

On the buying side, net purchases were recorded in commercial banks ($9.6 million) and oil marketing companies ($2.1 million).

Local insurance companies, which had aggressively sold stocks in April, added to their positions in May.

The near-term outlook for Pakistan’s equity market hinges on the upcoming FY26 budget, set to be unveiled in June.